BY BERNICE ROSS
October 22, 2022
Smart investors are contrarians — they sell when property values are increasing and buy when they are decreasing. According to Realtor.com, major cities such as Austin, Charleston, Denver, Phoenix and Las Vegas have plunged between 7.9 percent and 10.3 percent since June.
As prices fall across the country, 2023 to 2025 may be the best time in two decades to invest in real estate that creates cashflow now, as well as generating revenue to fund your retirement.
Did you know that over the last 200 years, 90 percent of the world’s millionaires built their fortunes by investing in real estate? As President Franklin Roosevelt observed over 80 years ago:
Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world.
Real estate vs. the stock market
Key benefits of owning real estate, as opposed to stocks, include:
- Real estate is a hard asset that you can live in or rent.
- Virtually all U.S. real estate has historically kept pace with and/or exceeded the rate of inflation.
- You build equity as prices increase, paying down your mortgage each month, and/or making improvements to the property.
- Stock trades are conducted by sophisticated algorithms at the nano-second level that can result in massive gains or losses in just a few minutes. In comparison, real estate moves at a snail’s pace roughly cycling through seller’s and buyer’s markets about every 10 years. These long-term cycles make it much easier to capitalize on market shifts.
- In the four previous downturns I’ve experienced, including the worst one in the early 1990s where the L.A. market plunged about 35 percent in a little over six months, when the market swung back up, prices jumped to the pre-downturn levels in only a few months.
- Stock market and financialservices fees consistently eat away at your profit margins. According to Investopedia, the typical financial planner charges 1.02 percent annually on the total amount of assets under management.
While the value of your investment property may go up and down as the market shifts, if you pay off your property in 15 to 30 years you will have an asset that has cash value that also functions much like an annuity.
Because real estate is a hard asset that keeps pace with inflation, it’s one of the most powerful hedges available to protect the growth of your investment!